LEBANON Law and Practice Contributed by: Nayla Comair-Obeid, Ziad Obeid and Zeina Obeid, Obeid & Partners
Commercial Agency Contracts Historically, these contracts were governed by Decree- Law No 34 of 1967 (DL No 34/67), which granted Leb- anese agents exclusivity and protection in relation to foreign principals or other agents in Lebanon. How- ever, the enactment of the long-awaited Competition Law on 17 March 2022 (the “Competition Law”), intro- duced significant changes. This law affected key pro- visions of DL No 34/67, particularly the long-standing concept of exclusivity that had been safeguarded for over 50 years. Under current Lebanese legislation, exclusivity still exists if the criteria outlined in Article 1 (2) of DL No 34/67 are met. However, the Competition Law intro- duces notable changes regarding the enforceability of such exclusivity rights vis-à-vis third parties. Specifi- cally, a third party cannot be negatively impacted by the presence of an exclusivity clause or its breach, such as when purchasing products from a manufac- turer/principal with an exclusive distributor in Leba- non. Nonetheless, the exclusivity clause remains valid and enforceable between the contracting parties. Banking Disputes The Lebanese financial crisis has given rise to another prominent area of dispute: the currency of payment, especially in agreements denominated in foreign cur- rency. These issues are particularly prevalent in loan agreements between banks and their clients. Leba- nese courts have supported both perspectives in local contracts – either requiring repayment in the agreed foreign currency or permitting payment in the national currency, even when a foreign currency clause exists. Similar currency-related disputes may also arise between banks and foreign investors or foreign funds, where the Lebanese courts typically uphold the con- tractual obligation to settle payments in the desig- nated foreign currency if the agreement is deemed an international contract. In addition to currency-related disputes, another sig- nificant area of litigation has emerged concerning the insolvency of banks. With depositors facing restric- tions on accessing their foreign currency accounts, some have turned to legal action by initiating insol- vency proceedings against banks. Depositors argue
ing the exequatur must provide specific reasons for such refusal. Once the exequatur is granted, the procedure for enforcement typically mirrors that used for enforcing court decisions – the competent Enforcement Bureau will carry out the execution of the award in accordance with the provisions of the LCCP governing enforce- ment. This includes pursuing the award debtor’s mov- able and immovable assets. The court decision granting recognition or enforce- ment of a domestic or international award rendered in Lebanon is not subject to any form of recourse (Arti- cles 805 and 819 of the LCCP). However, a court deci- sion granting recognition or enforcement of a foreign award – ie, an award rendered in a foreign jurisdiction, is subject to appeal on five specific grounds (Article 817 of the LCCP). If the court denies recognition or enforcement of a domestic or foreign award, or inter- national award rendered in Lebanon, its decision may be appealed (Articles 806 and 816 of the LCCP). The appeal of an award (in domestic arbitration) or an action to set aside an award (in domestic and interna- tional arbitration) de facto entails a challenge against the decision granting exequatur (Articles 805 and 819 of the LCCP). 14. Outlook 14.1 Proposals for Dispute Resolution Reform In Lebanon, there are no new acts or pieces of legisla- tion on or involving dispute resolution expected in the forthcoming year. However, it is worth noting that there are discussions to reform the arbitration law in the near future, but these have not yet materialised. 14.2 Growth Areas In the coming years, the most probable area of growth in commercial disputes will likely centre around com- mercial agency contracts and banking disputes.
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